On July 28, 2014, the Executive Board of the International Monetary Fund (IMF) met to discuss the first review of Sudan’s performance under its Staff-Monitored Program (SMP). An SMP is an informal agreement between country authorities and Fund staff to monitor implementation of the authorities’ economic program.1
The Sudan authorities’ performance under the SMP has been broadly satisfactory despite the major challenges the country has been facing since the July 2011 secession of South Sudan. The authorities have taken corrective measures to ensure implementation going forward. The uncertain political transition, the volatile domestic oil market, and the fragile security environment may slow down the reform momentum. All end of March quantitative benchmarks were met except for the ones on net national reserves and net domestic assets of the Central Bank of Sudan. The curb market exchange rate for the local currency further depreciated against the U.S. dollar on account of the uncertainties in the oil market triggered by the South Sudan conflict, thus widening the gap between the official and curb market rates to more than 50 percent. Urgent measures are needed to address the gap between the official and curb market exchange rates. The authorities have also made good progress toward meeting their end of June structural benchmarks.
Sudan’s external debt is high and largely in arrears, cutting off the country from access to most external financing sources. The authorities have implemented measures aimed at lowering inflation at end of March. The outlook for 2014 remains broadly favorable, with growth expected to reach 2.5 percent, and inflation to continue its downward trend to about 18 percent. The authorities have reiterated their continued commitment to the policies under the SMP and continued support for peace efforts in South Sudan to enhance stability in the region.
IMF staff will remain engaged with the authorities to monitor progress in the implementation of the authorities’ economic program, and will continue to provide targeted technical assistance to support Sudan’s capacity-building efforts and its adjustment and reform program.